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Do you need to lease or purchase an the electric vehicle? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by providing you with interactive financial calculators and tools as well as publishing quality and impartial content. We also allow users to conduct research and examine information for no cost – so that you can make informed financial decisions. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this website are provided by companies who pay us. This compensation could affect how and where products appear on this site, including for instance, the order in which they may appear within the listing categories and other categories, unless prohibited by law. This applies to our loans, mortgages,, and other products for home loans. However, this compensation will affect the information we publish, or the reviews that appear on this website. We do not cover the vast array of companies or financial offers that may be accessible to you.

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6 minutes read. Published September 23, 2022

Authored by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ins and outs of securely taking out loans to purchase an automobile.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping their readers to take control of their finances through providing concise, well-researched and well-read facts that break down otherwise complicated subjects into digestible pieces.

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The market has seen a dramatic increase over the past year, hybrids and electric vehicles accounted for 4.5 or 6.6 percent of registrations from January through June 2022, in the 2022 market trend report for the second quarter of 2022 report from . However, even as alternatives other than Teslas and Toyotas expand, jumping with both feet into a new vehicle type can be daunting. In addition, with an average cost of more than $66,000 in the line for an electric vehicle, the choice is loaded — financially and logically. If you fall into a category of curiosity , not confidence, an electric vehicle can help you determine whether an eco-friendly car is right for you, but is not recommended for those willing to commit. The option of leasing versus purchasing an electric vehicle

The lease of an electric vehicle can give you hands-on experience with the vehicle that is otherwise costly, but can cost more in the end if you exceed the limits or when you reach the end of your lease.

Is it better to lease or purchase electric cars? In terms of the question of whether to go with it, it’s fairly easy to figure out which is the best choice for you and your wallet. If you intend to switch up your vehicle every few years and are able to handle limitations on mileage, leasing could be great. If you’re looking for the flexibility of ownership then buying is the way to go. But the world of electric vehicles remains in its infancy, even with EV sales increasing every year. Therefore, committing to the long-term ownership of a vehicle which is not yet on the market could be risky. To decide which option is best for you, consider the advantages and drawbacks of each option. The pros to leasing an EV vehicle warranty . Lower monthly cost. technological features

Cons of leasing an EV The speedier depreciation of the vehicle Inability to sell vehicle Vehicle restrictions

Benefits of leasing an electric vehicle The advantages to an electric car include increased security through a comprehensive — meaning fewer visits to the mechanic- a lower monthly cost and access to the most recent technology. The warranty for vehicles generally leases last between 24 and 36 months, and during this time frame, your vehicle might encounter technical problems. When it comes to EV servicing, it is the requirement to replace the battery is the most frequent issue that you may encounter. If you lease, however the vehicle, it will remain covered under warranty, giving you the potential saving thousands. Lower monthly payments A car you lease gives you the ability to drive the car for a predetermined duration of time, and then pay every month. It is usually cheaper each month than a car payment for the same car. In addition to the lower monthly cost, you will also spend less money upfront and likely leave the lot without putting any cash down. Leasing costs less

The average monthly cost for leasing a brand new car in the fourth quarter of 2022 was $540. $667 when buying as per .

The latest tech features Even though the changes in model year-over-year for traditional vehicles aren’t dramatic, the EV field is advancing at a much faster rate. Leasing gives you the chance to be ahead of the curve in terms of available technologyinstead of being stuck with the previous year’s additions. The Hyundai Kona, for instance, was upgraded in the 2021 model to 2022 model which include a modernized infotainment system and new driver assistance technology. The drawbacks of leasing an electric vehicle Although leasing an EV can give you the opportunity to experience the thrill of driving electric, it does have its own disadvantages. The main issue is leasing approval, the inability to leave the lease and restrictions on the vehicle. Lease approval to lease a vehicle can prove to be a lot more difficult than an auto loan — especially for those with bad credit. While you may still be able to lease without an excellent credit score, it’s likely to result in a higher monthly cost. Think about the average credit score for people leasing new cars in the 2nd quarter 2022 — 736 — that is above the 729 average for an loan as per Experian. The inability to sell the car The process of letting a car lease end isn’t simple or cheap. If you do end up not enjoying the car you are leasing, you could be trapped in the lease or be forced to pay huge fees to end the . If you lease from a lessor and the terms of your lease, you could be required to pay for the residual value in addition to remaining charges and lease payments. Car restrictions when signing off on an there are several key things to be aware of: mileage, maintenance and modification of the vehicle. If you lease your EV you will likely be limited to driving from 12,000-15,000 miles per year, may have to foot the bill for and will not be able to customize the car. The benefits of buying an electric car to leasing an electric vehicle Full ownership with no vehicle restrictions Tax incentives and credits

The disadvantages of leasing an EV Expensive upfront cost Rapidly changing technology Out-of-pocket repair costs

Benefits of purchasing electric cars The primary benefit of buying an electric car instead of leasing is the joy of ownership. You can do whatever would like with your vehicle without having to limit the options that leasing companies have available or worrying about the cost of costs. As an owner of an electric vehicle, you can also take the full benefit of tax incentives and credits that would otherwise be given to the lender. You can own the vehicle completely based on your financial position, buying an EV can allow you to at your own speed and place you in total control of your vehicle. You’ll have a solid grasp on your total cost in advance, without having to worry about potential wear-and-tear charges that could add up at the end of the lease. No vehicle restrictions If you feel that the freedom of the road shouldn’t have any restrictions, purchasing an electric vehicle could be the right choice for you. You won’t be restricted by the odometer of your vehicle, and will be able to take advantage of the road. Apart from the ability to drive at your own pace, full ownership allows you the option of adding any bells and whistles that are your preference to personalize your vehicle. Incentives and credit when buying an EV you are able to avail a myriad options of incentives. One of these, the , can be worth up to $7,500 dollars. Some states also provide rebates to help lower the cost of purchasing a climate-conscious vehicle. But these incentives apply only for the person who owns the car, so if you were to lease you won’t be able to get these benefits. There are some disadvantages to buying electric vehicles The EV market has exploded and more affordable choices are emerging but they have more cost than a conventional option. Prices are higher, but they also include rapid technological advancements and increased maintenance costs. Prices for upfront costs can be much more expensive than conventional vehicles, at an average of $66,997 according to Kelley Blue Book June 2022 data. Electric vehicles also tend to carry almost identical credit profiles that those who finance luxury cars and paying , according to an . This makes the process more difficult for those with less than perfect credit scores. Save money and shop for an electric vehicle requires the same steps as it could use to reduce the cost of a conventional loan Check out the options before submitting an application for loan and don’t be afraid to turn down the loan. Technology is constantly evolving. Innovation in the electric car field is rapid and especially true as legacy brands, like Ford which has the Mustang Mach-E and Chevrolet’s Bolt, enter the space. However, this means that you’ll have to live with the latest technology that is in the car you purchase. Although the latest developments may appear minor to the naked eye, if flashy tech serves as a main attraction look into leasing to keep up with fashions. Repair costs out of pocket As with any vehicle under your ownership it is your responsibility to pay for any maintenance that is required in the course of ownership. But when it comes to the electric vehicle, this maintenance could be more expensive than normal visits to the repair shop. While the warranty on the battery will probably last between five and the 10-year mark, EVs require replacement for additional costly repairs, such as screens and advanced system updates. The bottom line It is best to approach the question of leasing versus purchasing an EV in the same way as in the case of a conventional vehicle. For some, the benefits of the newest available tech might outweigh the disadvantages of ownership full-time and, for others, taking the wheel of a vehicle with confidence and incentives makes sense. If you choose to purchase an EV make sure you understand the additional costs associated with ownership and make the most of . Leasing an EV, on the other hand will require the same care that it typically. Take a look at a few lease offers and understand the whole of the contract before committing to the lease.

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Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the details of using loans to buy the car they want.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain the confidence to manage their finances with precise, well-studied data that breaks otherwise complex subjects into digestible pieces.

Auto loans editor

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